Putin opposes creation of a state energy "monster"

Published: Friday, September 21, 2007, 0:32 [IST]

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MOSCOW, Sep 20 (Reuters) Russian President Vladimir Putin has said he is against the creation of state energy ''monster'' that would straddle the entire economy, sucking away banking and other resources, the Kremlin reported today.

When asked about a possible merger between state controlled Gazprom, the world's biggest gas company by reserves, and Rosneft, Russia's largest oil firm, Putin said he had heard nothing about a such a plan.

''I do not know about any rumours about a merger between the two companies with state participation,'' Putin was quoted as saying by the Kremlin.

''I do not consider that we should create a monster, which would dominate throughout Russia's economy and would drain all the resources, including banking resources, like a vacuum cleaner,'' Putin said.

Putin made the comments at a closed meeting with academics and journalists from the Valdai discussion club that took place last Friday. A transcript of the meeting was posted on the www.kremlin.ru Web site.

The media has recently speculated that the Kremlin was considering creating an energy giant with production that would exceed that of world energy majors such as Exxon Mobil, Royal Dutch Shell and BP.

An Energy Intelligence newsletter last month quoted unnamed industry sources as saying the Kremlin would establish the new energy behemoth before Putin leaves office in 2008.

The report said the entity would be created on the basis of state holding firm Rosneftegas, which already owns 75 per cent of Rosneft and 10.74 per cent of Gazprom, and could include other assets such as Russia's fourth largest oil firm, Surgutneftegas.

INTERNATIONAL CLOUT Putin, 54, has sought to boost Russia's economic might by allowing state-controlled Gazprom and Rosneft to snap up some of the gems of Russia's gas and oil industry and grow into global energy companies with international clout.

The Kremlin views its giant oil and gas reserves as one of the keys to boosting its geopolitical influence, after the chaos which followed the breakup of the Soviet Union.

Russia is the world's biggest gas producer and the second biggest oil exporter.

But the dominance of Gazprom and its plans for foreign expansion have provoked concerns in the European Union about the Kremlin's economic influence.

''If anyone has any concerns about the growth in the capitalisation of Russian companies and their influence on the world economy, then I must say that those concerns have a foundation,'' Putin said at the meeting.

''This influence will grow, not through the merging of Russian companies, but through their natural capitalisation, through boosting their market value,'' he said.